U.S. Bancorp Faces Challenges Despite Strong Market Position
U.S. Bancorp (USB), a financial services holding company based in Minneapolis, Minnesota, holds a significant market cap of $69.7 billion. The company delivers a diverse range of banking and investment services across the United States. Its offerings include traditional banking products, various lending solutions, treasury management, capital markets services, and payment processing for individuals, businesses, and government entities.
As a large-cap stock, valued at over $10 billion, U.S. Bancorp has established a strong presence particularly in the Midwest and West regions. It serves a diverse clientele through multiple platforms including digital services, branch locations, and specialized financial services.
Recent Performance Trends
In contrast to its market size, U.S. Bancorp has seen a decline in its share price, down 21.5% from its 52-week high of $53.98. Over the past three months, USB shares have slid by 17.8%, underperforming the Nasdaq Composite’s (NASDAQ) 11.3% decrease during the same period.
Year-to-date, U.S. Bancorp’s stock is down 11.4%, while the NASDAQ has seen a 9.5% drop. Over the last 52 weeks, shares have dipped 2.1%, compared to the NASDAQ’s 8.6% gain in that timeframe. Despite these setbacks, USB traded above its 50-day and 200-day moving averages until recently when it fell below its 50-day moving average in mid-December.
Quarterly Highlights and Comparisons
In its latest earnings report, U.S. Bancorp recorded a better-than-expected Q4 2024 adjusted EPS of $1.07. However, this was counterbalanced by a 5.6% drop in share price on January 16. Revenues approached $7 billion, showing a 3.7% year-over-year increase, yet missing forecasts. A decline in asset quality contributed significantly to market discontent, with non-performing assets rising 22.6% year-over-year to $1.8 billion. Additionally, net charge-offs increased 21.4% to $562 million, and provisions for credit losses surged 9.4% to $560 million. Furthermore, the net interest margin diminished by 7 basis points to 2.7%, as a result of escalating funding costs.
In comparison, The PNC Financial Services Group, Inc. (PNC) seems to be faring better, with a share price increase of 16.2% over the past year, although it also faced a 9.5% year-to-date decline.
Analyst Outlook
Despite U.S. Bancorp’s recent price performance, analysts maintain a moderately optimistic outlook for the bank. Of the 23 analysts monitoring the stock, the consensus rating remains a “Moderate Buy.” At present, USB is trading below the mean price target of $57.45.
On the date of publication, Sohini Mondal did not hold positions directly or indirectly in any of the securities mentioned in this article. All information provided in this article serves solely informational purposes. For more details, please review the Barchart Disclosure Policy here.
The views and opinions expressed herein reflect those of the author and do not necessarily represent those of Nasdaq, Inc.
